Prudential Regulations And Performance Of Finance Of Tier 2 Banks In Kenya

Abstract

The research delves into the intricate relationship between prudential regulations and the performance of finance of Tier 2 banks in Kenya. Through a comprehensive analysis, the study aims to shed light on how adherence to prudential standards impacts the operational and financial outcomes of these banks. By examining key variables such as credit, liquidity, corporate governance, and capital regulations, the research seeks to uncover the underlying mechanisms that drive performance of finance within the banking sector. Drawing on a comparative design and employing a linear regression model, the study reveals significant insights into the effects of prudential rules on the performance of finance of Savings and Credit Cooperative Organizations (SACCOs) in Kenya. Prior to the implementation of prudential legislation, factors such as liquidity, membership growth, core capital, and credit management did not significantly predict performance of finance. However, post-implementation, these variables emerged as crucial determinants of financial success, emphasizing the importance of regulatory compliance for sustainable business growth. The findings underscore the necessity for SACCOs and Tier 2 banks to adhere to prudential standards to enhance their performance of finance and capitalize on increased business opportunities. By bridging the gap in existing literature and providing a nuanced understanding of the impact of prudential regulations, this research contributes valuable insights to the ongoing discourse on banking regulations and financial stability in Kenya